On 27 January 2012, the Treasury released an exposure draft of the Personal Liability for Corporate Fault Reform Bill 2012.
The Bill constitutes the first tranche of proposed amendments to the Commonwealth director's liability legislation and relates only to Treasury (non-taxation) portfolio legislation.
The Bill aims to harmonise the approach to imposing personal criminal liability for corporate fault, otherwise known as derivative liability, by requiring Australian jurisdictions to audit their laws against COAG-agreed principles and to amend legislative provisions to reflect a national approach to imposing personal criminal liability on corporate officers.
Some of the proposed amendments to the Corporations Act 2001 (Cth) (the Act) are:
- reduction of liability imposed on company secretaries under s 188 of the Act so a breach is subject to a civil penalty rather than constituting an offence. Section 188 designates responsibility to a company secretary for certain administrative functions of the company;
- extension of responsibility for company secretaries under s 188 of the Act to require a register of charges be kept (subject to certain conditions) at the registered office or at an office at the principal place of business in Australia;
- repeal of s 601FC(6) of the Act dealing with personal liability for intentional or reckless involvement in the breach of the duties of a responsible entity of a registered scheme;
- increase of certain other penalties in Schedule 3 of the Act for breaches of relevant provisions.
The Bill also contains amendments to the Foreign Acquisitions and Takeovers Act 1975 (Cth), the Insurance Contracts Act 1984 (Cth) and the Pooled Development Funds Act 1992 (Cth).
Submissions regarding this Bill are due by 30 March 2012.
The proposals contained in this draft Bill, if adopted, will impact company secretaries and directors of companies by imposing further responsibility on them in terms of their administrative and reporting requirements.